Summary
Essex Property Trust, Inc. (ESS) reported solid financial performance for the nine months ended September 30, 2017. The company demonstrated consistent revenue growth driven by increased rental rates and a growing portfolio, particularly in its key West Coast markets of Southern California, Northern California, and Seattle Metro. The acquisition of Palm Valley in January 2017 significantly contributed to non-same property revenue and the gain on remeasurement of co-investment. Despite increased interest expenses due to new debt issuances to fund growth and refinance existing debt, the company maintained strong operational efficiency and profitability.
Financial Highlights
34 data pointsBeta
Financial Statements
Beta
| Revenue | $344.37M |
| Operating Expenses | $231.70M |
| Operating Income | $112.67M |
| Interest Expense | $55.94M |
| Net Income | $79.72M |
| EPS (Basic) | $1.21 |
| EPS (Diluted) | $1.21 |
| Shares Outstanding (Basic) | 65.99M |
| Shares Outstanding (Diluted) | 66.08M |
Key Highlights
- 1Total property revenues increased by 5.5% to $1,011.9 million for the nine months ended September 30, 2017, compared to $958.8 million in the same period of 2016.
- 2Net income available to common stockholders grew to $329.4 million for the nine months ended September 30, 2017, up from $215.6 million in the prior year period.
- 3The company generated a significant gain of $88.6 million on the remeasurement of its co-investment in Palm Valley following its acquisition in January 2017.
- 4Same-Property revenues increased by 4.0% to $916.1 million for the nine months ended September 30, 2017, driven by a 3.6% increase in average rental rates.
- 5Total assets grew to $12.51 billion as of September 30, 2017, from $12.22 billion at the end of 2016, reflecting continued investment in the real estate portfolio.
- 6The company maintained a strong liquidity position with $46.5 million in unrestricted cash and cash equivalents and $184.6 million in marketable securities as of September 30, 2017.
Frequently Asked Questions
Revenue growth was primarily driven by a 4.0% increase in Same-Property revenues, attributed to a 3.6% rise in average rental rates across its stabilized apartment communities. Additionally, the consolidation of Palm Valley in January 2017 contributed to the increase in Non-Same Property Revenues.
The acquisition of Palm Valley in January 2017 led to a significant gain on remeasurement of co-investment of $88.6 million. It also contributed to the increase in non-same property revenues and operating expenses due to consolidation.
Essex Property Trust maintains a strategy focused on managing its debt and capital resources to support its growth. This includes utilizing lines of credit, issuing new debt such as the $350 million senior unsecured notes in April 2017, and potentially using proceeds from equity distribution programs for debt repayment, acquisitions, and funding its development pipeline. The company believes its current liquidity, cash flow from operations, and access to capital markets are sufficient to meet its needs for the next twelve months.
Essex Property Trust actively manages its interest rate risk through various strategies. The company primarily borrows at fixed rates and utilizes derivative financial instruments like interest rate swaps and caps. As of September 30, 2017, it had interest rate swaps covering $175 million of debt and interest rate caps on $20.7 million of variable rate debt to mitigate potential increases in interest expenses.